The Distribution of Gains from Globalization
Valentin F. Lang and
No 2018/054, IMF Working Papers from International Monetary Fund
We study economic globalization as a multidimensional process and investigate its effect on incomes. In a panel of 147 countries during 1970-2014, we apply a new instrumental variable, exploiting globalization’s geographically diffusive character, and find differential gains from globalization both across and within countries: Income gains are substantial for countries at early and medium stages of the globalization process, but the marginal returns diminish as globalization rises, eventually becoming insignificant. Within countries, these gains are concentrated at the top of national income distributions, resulting in rising inequality. We find that domestic policies can mitigate the adverse distributional effects of globalization.
Keywords: Globalization; Personal income; Income inequality; Income distribution; Economic integration; WP,economic globalization,globalization score,national income (search for similar items in EconPapers)
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